Serco, the international services provider which holds a 50% stake in the Merseyrail and Northern Rail franchises, revealed deep annual losses today.

A pre-tax profit of £108.3m a year ago plunged to a £1.354bn loss for the year to December 31, as revenues also slid, for the first time in 25 years, from £4.284bn to £3.955bn.

The reversal is due to £1.3bn of onerous contract provisions, asset impairments, and other charges.

Serco also confirmed a £555m rights issue, and a refinancing of its banking and lending facilities, which it announced last November when the group issued a profits warning.

The group is undergoing a complete review of all its services and businesses following the scandal two yearsa ago over its tagging contract with the UK Government.

It was banned from government contracts for six months after it was accused of tagging people who were either dead or in jail.

Today the group announced that its strategy review was complete and its future lies as an international business-to-government organisation, specialising in public service provision.

Rupert Soames, Serco group chief executive, said today: “2014 has been an extremely difficult year for Serco, and the magnitude of the provisions, impairments and other charges reflects the scale of the challenges we have had to face.

“However, there is a real sense that, having confessed our sins and in taking the punishment, we are now ready to start on the path to recovery.

“We have all we need: a good plan, strong management to execute it, and, following the successful completion of our proposed rights issue and refinancing, a balance sheet that is an appropriate foundation on which to implement our new strategy.”

He added: “We are convinced that our strategy will deliver over time value to our shareholders, customers and colleagues alike.

“We will focus on providing public services to government and other bodies across five core sectors - Justice & Immigration, Defence, Transport, Citizen Services and Healthcare - and do so across some of the largest public services markets in the world.

“By concentrating on these markets, we are playing to our strengths.

“Asking shareholders for financial support, and lenders to adjust terms on their facilities, is not a position any management would want to be in.

“But we are determined to repay the confidence and support shown to us, to the benefit of all.”

Serco’s UK division saw revenues fall from £963m to £960m, but the previous year’s £17.8m trading profit was transformed into a £93.8m trading loss, due to provisions and impairments.